Red Light Districts in State Capitols_Peter Rost

Dr. Peter Rost, former vice-president for marketing at Pfizer who dared to tell the American public how they could save money by reimporting prescription drugs from Canada and Europe, has launched his own blog, continuing to reveal the real $$ amounts the pharmaceutical industry spends on marketing–57% of revenues.

Peter Rost is shocked–not by the revelation that Big Pharma spent more than $44 million in lobbying state legislators in 2003–2004, but rather by the fact that, considering the $230 billion (out of $500 billion globally) in North American revenues this industry haulos in, he is shocked at how little it takes to buy our legislators:

"According to the Center for Public Integrity’s most recent study, the pharmaceutical industry spent more than $44 million on lobbying state governments in 2003 and 2004 and I think we are supposed to be shocked by this number. But if anything is shocking, it is that it’s so cheap to buy our legislators.

The drug industry is the goose that laid not just one golden egg, but hundreds of blockbuster drugs, and whose only problem is that it can’t speed up the invention of golden eggs even more. And for such a fat goose, $44 million is not even pocket change; it is a rounding error.

In fact, global pharmaceutical sales tallies in at $500 billion. Of that revenue, $230 billion is in North America. That’s more than double the dollar sales in the European Union, in spite of the fact that the EU has a 50% larger population.

So let’s find out how much $44 million means to the drug companies. First we’ll get the general ratios from Pfizer’s most recent annual report. In 2005 Pfizer revenues were $51.3 billion, research costs 7.4 billion (14.4% of revenue) and "other costs and expenses," which I guess is the new buzz word to try to hide "marketing, selling and administrative" expenses were a whopping $29.3 billion (57% of revenue).

So let’s assume these numbers are true for the industry in general; it would then spend 57% out of $230 billion on non-research related costs. That’s $131 billion on marketing, selling, and a few executive airplanes, private chauffeurs and whatever other stuff they don’t want you to know about. $44 million constitutes 0.03% of total drug industry spending on non-research items. Perhaps it will provide some more perspective if I also note that $44 million is what it takes for any CEO to purchase a new Gulfstream executive airplane. And then he gets seating for fifteen thankful legislators."